“The wages of sin are death, but by the time taxes are taken out, it’s just sort of a tired feeling”
» Paula Poundstone- Comedian
If you can’t pay your taxes, the government will take your property. The stress alone is enough to make you want to just
say “I quit, do whatever you want,” but you’re a trooper, for whatever reason you hang in there until all of your options are exhausted.
You can’t ignore the tax lien notices, so when they hit your mailbox, you have to open them or risk waking up one day and finding out that your property has been sold at auction because you didn’t feel like dealing with the stress. Our advice is to get in front of your tax problem fast before it starts to drag you down a dusty, rocky, unforgiving path that will shave years off your backside.
Today, you’re fortunate because in North Texas we’ve never seen our real estate prices at these levels before, so if you have owned your property for awhile, and you owe back taxes, now may be the time to sell or refinance your property before things change again.
Real estate values have increased significantly in Texas over the last four or five years, and so has your property tax bill. When homeowners come to us, this is what we see most often.
5 Reasons People Can’t Pay Their Property Taxes
- You may have inherited a property that’s been sitting unattended for years. When this happens, your local municipality will step in and maintain the lawn and send you a bill for the services. However, instead of an average bill of twenty or thirty dollars, your bill is five or ten times that amount. Multiply that by six or seven times a year, times five or ten years, and you could have tax billed that exceeds your property value.
- People who are self-employed will sometimes get in trouble because of late and or delinquent payroll tax payments. When this happens, the taxes accrue interest and penalties, and before you know it, things have gotten out of control and “the tax man cometh to collect.” And when he does, he doesn’t ask you how much you can afford to pay, he just takes it right out of your bank account.
- Not escrowing your taxes with your mortgage payment can cause problems when you have unexpected financial losses that drain your cash reserves.People who do this have good intentions, but some unexpected event caused them to drain their cash reserves and get behind on their property tax payments.
- Losing your job, getting a divorce, and medical expenses are also common reasons that we see when people fall behind on their property taxes. This one is really tough because there are multiple problems to deal with simultaneously, and to the homeowner they all feel urgent. So what can you do to save your property from foreclosure?
5 Alternatives For Homeowners Who Can’t Pay Their Property Taxes
Property taxes are regulated and collected by your local government. Generally speaking, most counties will work with you if you communicate with them.
Challenge Your Home’s Assessed Value: Because property taxes are calculated based on assessed values, you can challenge your home’s assessed value as a way of reducing your overall property tax liability. Typically, you will need to dispute the value of your home shortly after you receive the tax bill. To win the challenge, you’ll want to provide market data indicating why you believe the assessed value is inaccurate. Take pictures of your home with you to the meeting at your local appraisal district.
- Pay What You Can: OK, so this isn’t the most reliable option because you may accrue penalties and fees. Pay what you can at the time your tax bill is due. Making payments shows the municipality that you’re making a good-faith effort to pay, but you simply can’t afford the full balance at this time.
- Pursue an Installment Plan: Under and installment plan, you pay property taxes over a longer period. For instance, if the county typically expects you to pay annual property taxes in full all at once, you might be able to create an installment plan where you pay bi-annually or quarterly. Our best advice is to set up an installment plan with your tax collector before you fall behind on payments to avoid late fees or interest that may be charged to you if your payments become overdue.
- Take Out a Small Loan: There are many community banks and property tax lenders that offer programs specifically designed to help homeowners pay overdue property tax bills. Just be careful that you are not robbing Peter to pay Paul – this alternative may be good if you have just experienced an unexpected setback (e.g. high medical bills) that made paying taxes difficult previously, but now you can afford to get back on track with regular payments. Beware of tax loan services with high fees and interest payments, you may be jumping from the frying pay to the fire, if you’re not careful. Read the fine print.
- Sell Your Home: If you’re not attached to the property, and it is not your homestead, consider selling it, before the equity is eaten up by the local taxing authority. Even with overgrown weeds and the roof falling in, you may be able to sell the property for a profit that you can live with, and you can remove the headache of having to deal with tax collectors.
At the end of the day, the government doesn’t want to force you to sell your property, but they do want their money. Tax liens can hurt your credit, and in some cases, your ability to get a job. Don’t procrastinate about paying delinquent taxes, pay them off as soon as you can before things get worst.
Send us your questions and let us know how things worked out. Ask for a “cash contract” offer on your property, if you are interested in selling.